Critical Payroll and Tax Compliance Updates

May 2015
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New Withholding Rules for New York City

Effective June 1, 2015, New York City personal income tax withholding computation rules for employees earning over 500,000 have been revised. The new withholding calculation can be found at http://www.tax.ny.gov/bus/wt/rate.htm.

BDB will automatically update withholding calculations to ensure compliance with the new withholding rules.


Oregon Locality Mandates Paid Sick Leave

Effective July 1, 2015, employers in Eugene, Oregon must accrue paid sick leave for employees working in the city limits. Sick leave will accrue at the rate of 1 hour of paid sick leave for every 30 hours worked, up to a maximum of 40 hours per year. Unused sick leave must be carried over to the following year, though employers are only required to grant 40 hours of sick leave annually.

The law covers full time and part time employees as well as temporary employees and telecommuters who work within the city limits. Employees begin accruals on July 1, 2015 or their date of hire, whichever is later. Employees must be employed for 90 days to be eligible to use the accrued sick leave.

For more information please visit: http://www.eugene-or.gov/sickleave


Seattle Updates

Seattle Mandates Employee Wage Statements

Effective April 1, 2015 under the Administrative Wage Theft Ordinance, employers within the city of Seattle, Washington must provide their employees with a written wage statement at the time of hire or change in employment. The ordinance includes the following requirements:

  1. Provide written notice of employee’s pay rate, pay basis, pay day, and tip policies at the time of hire or change of employment.
  2. Provide a wage statement to employees each time employee is paid including details of pay rate, pay basis, and all deductions.
  3. Keep payroll records for no less than three years
  4. Display a poster in the workplace detailing employees’ rights under the ordinance
  5. Wage statements and poster must be provided in both English and Spanish and any other languages commonly spoken at the workplace

Employers who fail to comply with the requirements of the ordinance will be subject to civil penalties.

FAQs, a notice template and a sample poster can be found here.

Seattle Minimum Wage increase

Effective April 1, 2015, minimum wage for employees working in Seattle, Washington increased to $11 per hour. Until April 1, minimum wage in Seattle was at the Washington state rate of $9.47, the highest state minimum wage in the U.S.

Large employers with more than 500 employees will see the minimum wage increase to $15 in the next three years. Large employers who offer health benefits will reach $15 per hour in four years. Small employers (500 or fewer employees) will reach $15 per hour in seven years.

For more information please visit: http://www.seattle.gov/civilrights/labor-standards/minimum-wage


Congress Accuses IRS of Diverting Funds from Taxpayer Assistance

On April 22, the House Ways and Means Committee released a reporting describing the IRS’s diminishing level of customer service during the 2015 tax season. The report blames this decline on the IRS diversion of funds from customer service to other items such as the implementation of the Affordable Care Act.

“These findings are deeply troubling,” said Ways and Means Chairman Paul Ryan, R-Wisc., in a statement. “At all times, but especially during tax season, the IRS should put the taxpayer first. But instead, the agency cut funding for the very customer service that taxpayers rely on. The IRS has a lot to answer for, and the Ways and Means Committee is going to hold it accountable.”

The IRS has said that the decline in service is a result of budget cuts, resulting in the need to reduce their workforce.

For a copy of the report please click here.


Microsoft Requires Contractors to Grant Paid Leave

In a new initiative on the mandated sick leave front, Microsoft will require many of its 2,000 contractors and vendors to grant employees who perform work for Microsoft either 10 paid vacation days and 5 paid sick days or 15 days of unrestricted paid time off. As there is no existing federal requirement to provide paid sick and vacation leave, large companies may now be starting to force other companies who contract with them to provide their employees with paid leave.

Bradford L. Smith, Microsoft’s general counsel, stated, “The research shows that employees who do get these kinds of benefits are far likelier to be happier, have higher morale and are far more likely to be productive.”

The states of California, Connecticut and Massachusetts have already passed paid sick leave laws, as well as a number of cities, including New York City. There is currently another attempt to pass paid sick leave legislation on a federal level, as Senator Patty Murray, Democrat of Washington, and Representative Rosa DeLauro, Democrat of Connecticut, have reintroduced the Healthy Families Act, which would require 7 days of paid sick leave a year.

For more please visit http://www.nytimes.com/2015/03/26/upshot/26up-leave.html?_r=0&abt=0002&abg=0


IRS Apologizes for Filing Status Notification Error

25,000 employers received incorrect notification from the IRS that they were to deposit and file taxes according to the requirements of Form 944, Employers Annual Federal Tax Return, instead of Form 941, which is a quarterly return. The error was due to an IRS computer programming error.

The notification may have caused employers to miss the April 30 filing deadline for Form 941. In addition, deposits may have been posted correctly. The IRS has announced that it will work with the employers to remove any penalties assessed as a result of the incorrect notification.

An apology letter, 3007-C, was sent this week to affected employers, stating the correct filing status.


Upcoming BDB Webinar

Do you know the difference between exempt and non-exempt employees? If not, you’re not alone, but the distinction can have serious consequences for your organization. This webinar will help you understand the complexities of paying hourly employees — including overtime implications, reporting time pay (if applicable), shift differentials, and how to navigate offering performance bonuses. We’ll also discuss tracking employees’ time for payroll purposes and best practices for off-the-clock work policies.

>> Register for FREE Wage & Hour Webinar <<
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